Several years ago while visiting the Gulf Coast of Mississippi, I heard many stories from business owners who were weighing the costs of rebuilding their business versus simply selling the remaining rubble and land, and skipping town.
Extreme conditions forced these business owners to make life-changing decisions with their business exit strategies. Though these resolutions were more or less forced, every business owner should have an exit strategy in mind from the first planning stages of a business.
Typically most people don’t ever consider how they will get out of business before going into business, but as a business counselor, this is paramount to a set of questions I like to ask. These are also questions you may wish to ask yourself:
- How long do you plan to operate and be a vital part of the business?
- When you move to the next phase of your life, (i.e., retirement), what will happen to the business?
- When you decide to get out of the business, will you sell it to partners or family members?
- Will you sell the business before it approaches a downward part of its business cycle, or simply sell the assets and move on?
- When will the benefits of running this business no longer fit into your overall life plan?
If you make an early exit and die, (the extreme exit), what will happen to the business and those who are left? How can the risks to others, (employees, bank, suppliers, investors), be minimized?
The whole concept of an exit strategy has been more than validated as I reflect upon my southern assignment. Exit strategies were realized in Mississippi, for example, in just a few short hours, when people lost buildings, customers, equipment, paperwork, and years of hard work and dreams.
So, what’s the moral of the story? Think about the conditions that would cause you to not want or be able to be in business anymore, and have a plan in place for making a graceful exit.
Chris Wendel is a Regional Director of the Michigan Small Business & Technology Development Center, in conjunction with the Traverse City Area Chamber of Commerce.